Of course, now that I've said that and logged out and back in again, it's properly showing as "extension" again.
And yes I'm using these notes as an excuse to hit that breakpoint.
Discussion
I think this may have been the result of user error. I was messing around with loading a secret key from my list of keys, but now looking at the keys again, it seems that the key was set as the same as my primary.
This would explain why it didn't seem to work (I was logging in with the same identity as before) and why it was then requiring me to set a local encryption key.
Nostrudel appears to be doing everything exactly as it should and the problem was between they keyboard and the chair.
I was about to say. it does not remove the account until you click logout. and if you try to login with an extension and it already has an account for that npub it will just reuse that one
This is exactly what happened. I tried to load what I thought was a sock account I had created (labeled "nostr 2" in my password database) because I wanted to see something wrt the user selector (can't remember what exactly) but it turned out that that entry was just another copy of my private key because the primary originally was stored in hex so when it "didn't work" (because it was the same identity from the extension) I gave up on whatever I was doing and was inadvertently running from a stored nsec the whole time but with the new complaint that it was now asking me for a passphrase for some reason when it never did that before. (which I blamed on the browser-hopping I had been doing)
When I was trying to help someone figure out how to read their locally-stored nsec by setting a breakpoint, I was surprised to see my key sitting there in a branch of the code I wasn't expecting to hit and got a little freaked out. Now I'm back to reading from the extension.